Countering the idea that China's smartphone market is only interested in cheap phones, Umeng, the nation's largest analytics firm, has issued a report for 2013 outlining that 27 percent of China's smartphones cost over $500, and that 80 percent of those are iPhones.

Highlighted by analyst Benedict Evans, Umeng's report (embedded below) details that China's market for smartphones and tablets exploded in 2013, nearly doubling from 380 million devices at the beginning of the year to more than 700 million by year end.

Apple currently markets three iPhone models on its Chinese website: iPhone 5s priced between $860 and $1120; iPhone 5c priced between $730 and $860; iPhone 4S priced at $535. The company originally continued to sell iPhone 4 in China priced at $435, but no longer lists that model for sale on its public website.

The fact that Apple has dominated China's most valuable segment of the smartphone market is particularly noteworthy because throughout 2013, it didn't have any agreement in place to sell iPhones on China Mobile, the nation's (and the world's) largest mobile carrier by far.

Apple inked a deal with China Mobile in January, making iPhone 5s and iPhone 5c two of the very few models capable of working on the carrier's newly deployed 4G network using a China-specific version of LTE technology.

Apple's chief executive Tim Cook told shareholders last month that both the iPhone 5s and iPhone 5c had outsold the models they replaced.

Apple building an iOS ecosystem stronghold in China

Evans separately noted that Apple now has "probably more" iPhone users in China than it has in the U.S., with around 100 million iPhone users in each country.

Last September, Cook noted Umeng research stating that the total number of Chinese iOS developers has increased 9.3 times between 2011 to 2013. Globally, Apple has over 6 million registered developers, with 1.5 million added in just the last year Cook said.

Evans rhetorically asked, "Has any foreign tech company done as well in China as Apple?"

Samsung, in contrast, has only captured 24 percent of China's Android market. In the U.S., Samsung maintains 26 percent of the entire smartphone market, behind Apple's 45 percent share, meaning Samsung's models make up nearly half of the U.S. Android market.

All smartphone users are not the same

Umeng detailed a series of trends related to apps, including a breakdown of what types of apps are used by different price tiers of smartphones.

"Users of phones priced below $150 tend to spend more time playing games and their favorite app categories is theme and wallpaper," the firm noted. "They are often sensitive to the price, have low requirements for the performance of phones, tend to be affected by pre-installed apps, and are less likely to use e-commerce, finance, health and lifestyle apps."

In contrast, Umeng stated that "users of high-end deices have more diverse needs and favor apps for news, navigation, finance, and ecomerce.. They might thane certain economic power, but more importantly, they rely on mobile Internet and their life patters will be shown on mobile devices, such as their demands for getting information, learning, shopping and finance management."

Umeng's data outlines that devices selling for less than $149 make up just 35 percent of China's smartphone market. Phones priced between $150 and $329 account for another 22 percentage points, while devices at $330 to $499 make up 16 percent of sales, leaving 27 percent priced above $500.

"The market for budget Android phones is strong in China, with 57 percent of devices under the $330 price range," Umeng stated. "However, over a quarter are using high end smartphones costing over $500; 80 percent of these are iPhones."

The firm also notes that the market for users new to smartphones is shrinking, and that a much larger percentage of smartphones are now upgrades for existing users, a trend that would appear to benefit higher end devices rather than cheap, entry level offerings.

Umeng's data highlights the fallacy of overall market share figures that throw valuable market segments together with low value volume sales. Data publicly published by IDC, for example, stated that Apple had "only" 7 percent of China's entire smartphone market, a figure that misled a variety of journalists into thinking that Apple's percentage points of market share were equal in value to the percentage points taken up by vendors of cheap devices that do not make any money.

Far fewer iPhone users jailbreak

Another trend Umeng highlighted is the rapid decrease in users jailbreaking their iPhones. While more than half of all iPhone 3GS models were jailbroken (in large part to enable them to work on local networks prior to their to receiving official support from carriers), only a tiny fraction of recent models are.

Overall, "the number of jailbroken iOS devices continues to fall (from 30% at the beginning of the year, to 13% at the end of the year," Umeng reported. "China has now become one the first launch areas for iOs devices. Users can easily and quickly get the new devices through official channels instead of purchasing jailbroken devices through the black market."

The analytics firm noted that users are also "becoming aware of the security risks of using a jailbroken phone."

Huh? Am I making a dumb math mistake, or is that like the biggest news for Apple ever?

Nope, you're right: It's pretty huge news.

And pretty much anyone should have seen this coming a mile away. China has a middle class that grows by leaps and bounds every day. Sure, there are a lot of poor people China -- because there are a lot of PEOPLE in China. But there are also a lot of people who have the money to spend on premium items.

I mean, the women's tennis tour (WTA) has something like NINE tournaments in China this year. And for those who don't really follow tennis, they tend not to play tournaments -- let alone nine of them -- in places that can't economically support both the tournament itself and tennis in general. Li Na, one of the best players in the world, and Aussie Open champ this year is a like a mega-star in China. Tennis is huge now.

The entire article is about Apple's unexpected success in China's high-end smartphone market.

How can you say that "Apple is doomed" when they have been increasing their market share in the U.S. and now China, too. Right now, Apple has 41.6% of all U.S. smartphone subscribers, up 1% from the previous quarter. They outsell Samsung, their closest competitor, by 45% to 26%. In the desirable high-income, advanced degree market in the U.S., Apple outsells all other smartphones combined.

Could you provide the rationale for your claim? Or were you being sarcastic?

The entire article is about Apple's unexpected success in China's high-end smartphone market.

How can you say that "Apple is doomed" when they have been increasing their market share in the U.S. and now China, too. Right now, Apple has 41.6% of all U.S. smartphone subscribers, up 1% from the previous quarter. They outsell Samsung, their closest competitor, by 45% to 26%. In the desirable high-income, advanced degree market in the U.S., Apple outsells all other smartphones combined.

Could you provide the rationale for your claim? Or were you being sarcastic?

"Apple is doomed" is a popular line used when good news about Apple and their devices is released. It comes from the fact that, lately, no matter if the news is good or bad, AAPL, the stock, makes a turn for the worse.

Folks stopped using the /s to denote sarcasm after saying it because it has become understood that "Apple is doomed" no matter what the news.

The entire article is about Apple's unexpected success in China's high-end smartphone market.

How can you say that "Apple is doomed" when they have been increasing their market share in the U.S. and now China, too. Right now, Apple has 41.6% of all U.S. smartphone subscribers, up 1% from the previous quarter. They outsell Samsung, their closest competitor, by 45% to 26%. In the desirable high-income, advanced degree market in the U.S., Apple outsells all other smartphones combined.

Could you provide the rationale for your claim? Or were you being sarcastic?

"Apple is doomed" is a popular line used when good news about Apple and their devices is released. It comes from the fact that, lately, no matter if the news is good or bad, AAPL, the stock, makes a turn for the worse.

Folks stopped using the /s to denote sarcasm after saying it because it has become understood that "Apple is doomed" no matter what the news.

It was trademarked here at AI.

Sadly, reflecting the times -- whence not many people seem to give much of a hoot about IP issues -- no one bothers with the 'Apple is doomed™' any more.

Tim Cook is gay, believes in climate change, and cares deeply about racial equality. Deal with it (and please spare us if you can't).

But we’ve been told over and over that Apple has failed in China because it doesn’t have a cheap phone for emerging markets. You mean that’s not correct?

I've never understood the mentality of people who say things like that. It's like claiming that Mercedes is doomed because they don't have a cheap subcompact for emerging markets, or that Louis Vuitton is destined to fail because they don't have a line of $30 purses for low-income women. You don't maintain a premium brand image by selling low-end, cheap products.

It's why Nissan, Toyota, and Honda had to create the Infiniti, Lexus, and Acura brands respectively. Customers in the market for upscale, luxury vehicles don't want something wearing the same badge as a Sentra, Yaris, or a Civic.

Huh? Am I making a dumb math mistake, or is that like the biggest news for Apple ever?

Yep, this is somewhat nonsensical.

The same report goes on to say there are about 700M active smartphone users in China. Of these, about 21.6% or 140+M are active iPhone. LOL!! Apple hasn't sold that many iPhones in China -- so unless there is a huge secondary iPhone market in China we don't know about, this number is a complete bull.

The same report goes on to say there are about 700M active smartphone users in China. Of these, about 21.6% or 140+M are active iPhone. LOL!! Apple hasn't sold that many iPhones in China -- so unless there is a huge secondary iPhone market in China we don't know about, this number is a complete bull.

There is a massive black-market. Well, the black-market isn't as huge as it once was, now that all the major carriers in China sell the iPhone. But before China Mobile, and before the others, there were still a lot of Chinese with iPhones.

I honestly don't see how anyone can say that Apple is a better company than Google is when Google has the strongest backing on Wall Street. Market share remains the most important measure of how well a company is doing and Apple looks pretty sick based on shrinking market share. Doesn't it make sense that investors put their money on a company that looks like a winner? Apple certainly does not look like a winner from an investor's point of view. I have no doubt that Apple is making the most revenue and profits at the moment but nearly everyone claims those days are practically over. I'm a long-term Apple shareholder but even from my point of view Apple seems like a struggling company with nearly no one backing the company. It's never been said that Google is a dying company. Apple holds that title. Apple definitely doesn't get any respect as a company without Steve Jobs around. Tim Cook doesn't seem fit to be Apple's CEO. Apple seems to be throwing away so many opportunities to give itself a solid future despite sitting on a huge mountain of cash. I've just about given up on Apple as the company looks like it's being run into the ground.

Yes, this will to end in tears. Only 80%? Clearly a company in decline. Beleaguered, I tell ya. In free-fall.

The entire article is about Apple's unexpected success in China's high-end smartphone market.

How can you say that "Apple is doomed" when they have been increasing their market share in the U.S. and now China, too. Right now, Apple has 41.6% of all U.S. smartphone subscribers, up 1% from the previous quarter. They outsell Samsung, their closest competitor, by 45% to 26%. In the desirable high-income, advanced degree market in the U.S., Apple outsells all other smartphones combined.

Could you provide the rationale for your claim? Or were you being sarcastic?

not sure where that 700M number come from. but one thing for sure is that lot of iPhone users in china are starting to have 2 iPhones in hand: one for regular usage, while another one is reserved exclusively for banking/online payment etc. online payment over phone is very good in china, but ppl lost confidence on security.

of course, these folks can afford iPhone and money is not issue for them as i guess.

Originally Posted bytooltalk

Yep, this is somewhat nonsensical.

The same report goes on to say there are about 700M active smartphone users in China. Of these, about 21.6% or 140+M are active iPhone. LOL!! Apple hasn't sold that many iPhones in China -- so unless there is a huge secondary iPhone market in China we don't know about, this number is a complete bull.

I've never understood the mentality of people who say things like that. It's like claiming that Mercedes is doomed because they don't have a cheap subcompact for emerging markets, or that Louis Vuitton is destined to fail because they don't have a line of $30 purses for low-income women. You don't maintain a premium brand image by selling low-end, cheap products.

It's why Nissan, Toyota, and Honda had to create the Infiniti, Lexus, and Acura brands respectively. Customers in the market for upscale, luxury vehicles don't want something wearing the same badge as a Sentra, Yaris, or a Civic.

The argument comes from the OS wars, cola wars, etc. Simple for analysts to grasp.

OSes effectively were networks, and Metcalf's Law says the value of the network squared when the number of users doubled, and arguably will attract the best developers, who will write the best apps who will attract more customers, etc. Hence, if there is someone, anyone who gains 50% marketshare and is rising, (Windows 95), all the rest are doomed.

I think today Gruber at DaringFireball.net captures the 'ecosystem' aspect and how some customers are 'better' than others. That's the key... Today the ecosystem is more than shrink-wrapped SW and closed office productivity SW... it's cloud based iron and Petabytes of information that has thin but critical veneer at the endpoint. That veneer must always work, be amazingly intuitive, be easy to write code against, and have the critical support structures to protect all these consumers and vendors from being hacked. This is the iOS ecosystem.

Extending your car analogy... Apple 'Car Owners' not only buy the premium car, which comes in 3 coupes and 2 sedans, almost all running the latest ignition, convenience panel and transmission firmware , but they drive more, buy more gas, pay more in highway taxes (data fees), and drive to places to buy things... a lot of things... and they buy lots of add-ons to the car (apps), and aftermarket suppliers can easily integrate into the car in a way that makes the ride even nicer.

The other car makers, even ones with expensive larger vehicles as well as the cheaper ones... seem to be driving less, to fewer places, and they buy less stuff, there are 100's of different sizes and shapes, some with 5 wheels, some with 2 trailer hitches, And mfgr improvements to the electronic ignition and transmission are typically controlled by the oil companies, who sometimes decide it's not worth the hassle of updating... making it even harder for the aftermarket people to make stuff for those autos.

not sure where that 700M number come from. but one thing for sure is that lot of iPhone users in china are starting to have 2 iPhones in hand: one for regular usage, while another one is reserved exclusively for banking/online payment etc. online payment over phone is very good in china, but ppl lost confidence on security.

of course, these folks can afford iPhone and money is not issue for them as i guess.

Originally Posted bytooltalk

Go read the original article by Benedict Evans DED cited. The title of the article goes, "700m smartphones & tablets in China." So it's not just the iPhones, but also the iPads, etc -- in another word, they are comparing all Android devices vs all iOS devices, not Android smartphones vs Apple iPhones, although the charts clearly indicate it's "distribution of price range in smartphones in China."

The entire article is about Apple's unexpected success in China's high-end smartphone market.

How can you say that "Apple is doomed" when they have been increasing their market share in the U.S. and now China, too. Right now, Apple has 41.6% of all U.S. smartphone subscribers, up 1% from the previous quarter. They outsell Samsung, their closest competitor, by 45% to 26%. In the desirable high-income, advanced degree market in the U.S., Apple outsells all other smartphones combined.

Could you provide the rationale for your claim? Or were you being sarcastic?

Sarcasm. You must be new around here.

Quote:

Originally Posted by Fred Maxwell

I've never understood the mentality of people who say things like that. It's like claiming that Mercedes is doomed because they don't have a cheap subcompact for emerging markets, or that Louis Vuitton is destined to fail because they don't have a line of $30 purses for low-income women. You don't maintain a premium brand image by selling low-end, cheap products.

It's why Nissan, Toyota, and Honda had to create the Infiniti, Lexus, and Acura brands respectively. Customers in the market for upscale, luxury vehicles don't want something wearing the same badge as a Sentra, Yaris, or a Civic.

Yes. And if you frequent Weibo or the Chinese Web Blogs I see an interesting shift away from Android. China has it's share of Apple fanboys, while reviews of Android phones almost always start with their poor user experience, lack of apps etc. this is a country that relies heavily on word of mouth reviews. Despite the rise of local brands like Xiao mi, none has come close to Apples brand and quality. Besides, the newly rich In china craves luxury brands as a sort of status symbol for their wealth.
How can they show how rich they are with cheap plastic? As China's income rises iPhone sales are bound to follow.

"Apple Inc is on its way to a disastrous first quarter for Fiscal Year 2014 as analyst Brian Blair of Wedge Partners delivers the bad news about the company's Q1 performance. According to Mr Blair, blah blah blah."

Here's a positive take on the exact same report from Brian Blair, "Why Apple Innovations Could Boost Stock 20%."

Basically, I think the guy said that this quarter was probably nothing special, so investors with lofty expectations may be disappointed, but the rest of the year could be pretty good.

The same report goes on to say there are about 700M active smartphone users in China. Of these, about 21.6% or 140+M are active iPhone. LOL!! Apple hasn't sold that many iPhones in China -- so unless there is a huge secondary iPhone market in China we don't know about, this number is a complete bull.

I agree that the figures look very suspect.

The 140+M includes ipads. Evans estimates the number of active iPhones in China at approximately 100m.

This would suggest that 1 in 4 of all iphones made since 2007 are still active in China???

You people really haven't been keeping track of Apple's share price, have you? You need to realize that the stock market was on fire for all of 2013 and every tech stock on Wall Street was reaching new highs every other day. Do you know what Apple did in 2013? It sucked horribly. It became the bottom feeder company of all tech stocks thanks to Tim Cook. Tim Cook has doomed Apple to mediocrity. No matter how many smartphones and iPads Apple sells or how much reserve cash Apple is holding, the company's value will continue to drop. That makes Apple a truly doomed company. Most of Wall Street truly believes Apple will fail due to loss of market share. Wall Street believes that with loss of market share, comes loss of profits and Apple is basically living on borrowed time. A blind man could randomly pick any stock on the market and come out with a better investment than Apple.

Apple has every advantage over most of the companies on Wall Street and the stock continues to drop because the people running Apple don't know what the hell they're doing when it comes to finding growth markets. Apple doesn't have to live and die by the iPhone. Apple could buy into so many other revenue producing businesses that it would make Wall Street's head spin. Instead, Apple just keeps sitting on the reserve cash like a mother hen sits on hard-boiled eggs and no egg ever hatches. That's why Apple is doomed. Apple keeps saying it's saving the reserve cash for a rainy day. Rainy day? It's already been raining for a year and a half for Apple shareholders. Apple has no search engine and no cloud services despite sitting on $160 billion (yes, $160 billion). A search engine and cloud services wouldn't even put a dent in Apple's cash reserve. Apple is dooming itself by doing absolutely nothing to increase revenue. You watch Apple's stock take a huge drop on this quarter's earning report and then tell me I didn't warn you.

No, they don't. Do you see a Mercedes three-pointed star on that? That's like claiming that the Jetta is a Lamborghini just because the same parent owns both.

It all depends on how you word it. Not having a logo on it only means it doesn't have that branding but that doesn't mean it wasn't designed or built by another brand or part of the larger umbrella. If VW owns Bugatti I'd have no problem saying that all modern Bugatti's are VWs but I wouldn't call a Jetta a Bugatti.

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